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The New York Public Commission issued a letter revoking its approval of the 2016 merger between Charter Communications and Time Warner Cable (operating as Spectrum in New York) last week, giving the ISP 60 days to submit a plan “to ensure an orderly transition to a successor provider(s).”
This is a big deal for the industry as it's an issue that will likely become more prominent after the repeal of net neutrality earlier this year, which might cause internet service providers to block or limit access to content by offering paid workarounds.
The decision comes after allegations that Spectrum defrauded consumers by providing internet service that was much slower than advertised.
“Charter, doing business as Spectrum, has — through word and deed — made clear that it has no intention of providing the public benefits upon which the Commission’s earlier approval was conditioned,” the letter writes.
“In addition, the Commission directed Commission counsel to bring an enforcement action in State Supreme Court to seek additional penalties for Charter’s past failures and ongoing non-compliance. That enforcement action will be filed today in State Supreme Court in Albany.”
The letter continues to list several reasons for taking action, stating that Spectrum repeatedly failed to meet deadlines, failed to fully commit to its obligations under the 2016 merger agreement, and purposefully obfuscated its performance and compliance obligations to the Commission and its customers.
The last item on the list references a complaint made in 2017 from then-Attorney General Eric T. Schneiderman on behalf of consumers using Netflix streaming services and playing Riot Games’ League of Legends.
Using customer complaints as well as data from Netflix and Riot, Schneiderman alleged that Spectrum falsely advertised the internet speeds customers could expect while paying for the 300, 200, 100, and 50 Mbps plans, all while leasing out hardware that couldn't actually handle those promised speeds.
The complaint speculates that only when customers complained enough did the ISP boost their individual connections, wanting to avoid action by the Federal Communications Commission.
Schneiderman went on to argue that Spectrum deliberately bottlenecked internet speeds for streaming and online gaming until companies like Netflix and Riot agreed to pay extra for "access to Spectrum customers".
Again, the FCC's decision to repeal net neutrality will likely make these types of issues more frequent in the market, as consumers will be forced to re-consider their contracts with local ISPs and then hold them responsible.